HSA Accidental Contribution - How does it impact limits?

[s20250305]

I made a contribution to of $3,300 in January 2025 to my HSA (limit: $4,300) for tax year 2025 (after-tax NOT through employer deductions), but then realized it would result in an overcontribution due to the amount my employer contributes overtime, so I decided to take it out using an "Excess Contribution Form" through my brokerage and have already received the funds + any earnings deposited back into my bank account (this was also done later in January 2025).

Would my contribution limit reset by $3,300? Or would it still be considered that I've contributed $3,300 already and only have $1,000 of room left?

[KrisD15]

If the contribution (and earnings) were corrected (removed) it is like the contributions never happened. 

Since the contribution was eliminated, your limit for 2025 is the full limit and the 3,000 would not factor into nor lower that limit. 

[BillM223]

First, this $3,300 contribution in January was for 2025, not 2024, right?

Second, have you gone through the HSA interview in TurboTax? Did TurboTax tell you that you had excess contributions? If so, what was the amount?

The issue here is that the HSA is not a savings account that you can willy-nilly put money in and take money out of. In this case, you can't withdraw money from the HSA as excess contributions unless they were actually excess, which you find out when you run through the HSA interview in TurboTax.

Third, I cant answer your last question ("Would my contribution limit reset by $3,300?") until I know what TurboTax told you about excess contributions.

In any case, your 2025 contribution limit is the same: $4,300 (for Self-only). The limit is not reset. But do tell me what TurboTax told you.

[s20250305]

Yes the contributions were made for 2025, not 2024. I have not gone through the Turbo Tax HSA interview questions, as I believe this situation does not apply to my 2024 taxes. 

Technically I have not surpassed my contribution limit when I submitted the "Excess contributions" form and received the withdrawal amount, but I will definitely be surpassing my limit in a few weeks if I do not withdraw the amount (due to monthly contributions through my paystub). 

Is there a way to access the HSA interview on Turbotax for 2025? 

[BillM223]

Oh, I'm sorry, when I asked you to go through the HSA interview, I was thinking of tax year 2024, but you are speaking of tax year 2025.

No, the 2025 software is not yet ready (and won't be until at least the end of December).

But except for the contribution limits, not much changes year over year with HSAs, so practicing with your 2024 return (before you file) will be close.

Let's see if this will work: tell your HSA custodian that you made a mistaken distribution. There is no such thing really, but perhaps your HSA custodian will allow you to recharacterize your "excess contributions" as a mistake and just return your money. Of course, they have already returned your money, so this is mostly a matter of them changing their own paperwork.

But, honestly, HSA custodians are reluctant to do such things, so be nice. If they do this for you, they may send you a corrected 1099-SA. Speaking of which, have you received a 1099-SA? If so, what is the distribution code on it? 1? 2?

Well, came back and tell us what you find out about changing the contribution.